Wage and Hour Law Update : Wage & Hour Lawyer & Attorney : Jackson Lewis Law Firm : Minimum Wage, Overtime & Service Contracts

As we have repeatedly discussed, use of a so-called “auto-deduct”, wherein a predetermined amount of time is automatically deducted from an employee’s hours of work to correspond to a meal period with the understanding that the employee will perform no work during that period, can give rise to individual or class claims that an employee has in fact performed some work during that period on one or more days, rendering the time compensable. This is particularly so in professions such as health care or security services, where the need to provide assistance, however fleeting, can create an instance of arguable “work” any time the employee remains on the premises. Often, employees assert such claims as putative collective action claims, alleging a systemic practice of requiring or allowing employees to perform work during these meal break periods, and then automatically deducting the time from hours of work. In a pair of new decisions, two different district judges in Pennsylvania have decertified such collective actions against Pennsylvania hospitals, finding at the close of discovery that the putative collective action plaintiffs had failed to establish similarity between their claims: i.e., they failed to establish that the employer had a “policy or practice” of allowing such work to be performed and to go uncompensated. Camesi v. Univ. of Pittsburgh Med. Ctr., 2011 U.S. Dist. LEXIS 146067 (W.D. Pa. Dec. 20, 2011); Kuznyetsov v. West Penn Allegheny Health Sys., 2011 U.S. Dist. LEXIS 146056 (W.D. Pa. Dec. 20, 2011).

In these cases, the employers were able to establish through a combination of documentary and deposition evidence that they had adequate safeguards in place to ensure FLSA compliance. These safeguards included policies and practices which require the recording of all hours of work, and a mechanism (of which the employees were duly advised) for reporting any instance of work outside the scheduled time or during a meal break, which would otherwise be automatically deducted and thus not paid. In Camesi, the court observed “Ms. Camesi received training regarding [defendant]'s meal break cancellation policies, and pursuant to those policies, she was paid for working through meal breaks at least five times . . . [she] testified that her supervisor would not have been aware of whether she had worked through unpaid meal breaks, and she never complained to any superior about working through meal breaks and not being paid.” Thus, the hospital did not “suffer or permit” Plaintiff to work through lunch without pay if and when she performed work during lunch without availing herself of the policy, as she alleged.

While these are positive decisions, they were only obtained after significant litigation.  Employers must closely balance the administrative convenience attendant to such a practice with the heightened risk that an FLSA violation will occur or be alleged. Employers should adopt such policies with due care and at the least even if such policies are adopted ensure there are clearly communicated mechanisms for employees to report that they worked during such otherwise uncompensated periods. 

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Assisting Lady Gaga with her day-to-day needs may be a dream to many, but does it make one exempt from overtime pay? Under DOL regulations, an administrative assistant who is paid on a salaried basis and exercises significant independent discretion and judgment is exempt under the "administrative exemption." 29 CFR § 541.203(d). This is the same exemption that applies to others who exercise significant independent discretion and judgment in performing "office or non-manual" work (as demonstrated by regulation 541.203), such as certain Human Resources employees. Challenges to the applicability of the exemption to executive or personal assistants are not new; the fact that the individual being assisted is a prominent professional in his or her industry is not determinative. Some courts applying the DOL’s regulation have expressed reluctance to rule that well-compensated individuals providing such assistance do not exercise "discretion and independent judgment, but case law remains unclear. See   Seltzer v. Dresdner Kleinwort Wasserstein, Inc., 356 F. Supp. 2d 288 (S.D.N.Y. 2005)(executive assistant to president of defendant investment bank qualified for exemption); Malena v. Victoria's Secret Direct, LLC, 2010 U.S. Dist. LEXIS 121320 (S.D.N.Y. Nov. 16, 2010)(denying summary judgment as to whether defendant's good faith belief that executive assistants performed exempt work precluded liability).

In a new challenge, a former personal assistant to chart-topping entertainer Lady Gaga has filed suit, alleging that she essentially worked around the clock in exchange for a fixed salary, and thus did not receive hundreds of thousands of dollars in premium overtime pay due under the FLSA and state law. O'Neill v. Mermaid Touring Inc., Civil Case No. 11-9128 (Southern District of New York, Dec. 14, 2011)(Jones, J). 

Employers and individuals retaining personal or executive assistants to perform similar services should be aware of the employment risks associated therewith. At the least, in addition to ensuring such employee is paid on a salaried basis, the employer must ensure that the assistant utilizes independent discretion in judgment in performing job duties.

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The proliferation of FLSA lawsuits brought by “non-exempt” employees for alleged uncompensated working time has highlighted several important FLSA questions. One prominent and thorny question concerns when and how an employer is deemed to have constructive knowledge of work allegedly performed by an employee, such that the employer will be deemed to have “suffered or permitted” that work, rendering such work compensable time. Often, employers are frustrated by this broad and unclear standard, which may entitle employees to compensation even when no member of management was aware that work was being performed. In a new decision, the Court of Appeals for the Seventh Circuit has identified circumstances under which an employer is not obligated to compensate the employee for such hours. Kellar v. Summit Seating Inc., 2011 U.S. App. LEXIS 24745 (7th Cir. Dec. 14, 2011).

Kellar concerned a sewing manager for Defendant who claimed that she regularly arrived at Summit's factory “between 15 and 45 minutes before the start of her 5:00 a.m. shift.” She characterized her activities upon arrival as follows:

about 5 minutes unlocking doors, turning on lights, turning on the compressor, and punching in on the time clock. Then she prepared coffee for the rest of Summit's employees, which took her about 5 minutes. Depending on her workload, she spent 5 to 10 minutes (or longer) reviewing schedules and gathering and distributing fabric and materials to her subordinates' workstations, "so that they could go straight to work, rather than waiting for [her] to bring [fabric] to them." For another 5 minutes, she drank coffee and smoked a cigarette. The remaining time was spent performing "prototype work" (preparing models for production), cleaning the work area, or checking patterns.

Id. at * 2-3. Plaintiff conceded that “no one told her that she needed to come in before her shift, but she arrived early because it would have been "a hassle" to show up at 5:00 a.m. and still get her subordinates up and running close to the start of their 5:00 a.m. work shifts.” Id. Plaintiff sometimes punched in early (as was common among Defendant’s employees), but when she forgot to do so she would write the “official” shift start time on her timesheet (i.e., 5 a.m.), and she did not complain at any time that her paycheck failed to capture her hours of work. 

The lower court held _that plaintiff was not entitled to compensation for the alleged pre-shift work, and she appealed to the Seventh Circuit. For purposes of the appeal, the parties did not dispute whether or not these activities took place (as typically is disputed). The legal questions before the court were simply: (1) whether these activities were “preliminary” and thus excludable from hours of work under the FLSA on that basis; (2) whether this time was “de minimis” and thus not compensable; and, (3) whether defendant had the aforementioned knowledge necessary to render this work compensable under the FLSA. 

After answering the first two questions in the negative, ruling that these activities would constitute compensable work if Defendant had suffered or permitted them, the court rejected Plaintiff’s claims. The Court observed that Plaintiff, as a manager, was aware of and at times enforced Defendant’s policy of forbidding unauthorized overtime, and participated in weekly meetings discussing the upcoming week’s schedule. The Court further noted that Plaintiff’s early punch-ins did not constitute notice to the employer of pre-shift work because early punching was a common practice at Defendant’s place of business, and “clocking in early would not necessarily have alerted Summit that Kellar was performing pre-shift work. Id. at * 17 citing 29 C.F.R. § 785.48.   Under these circumstances, the Court concluded that “[management] had little reason to know, or even suspect, Kellar was acting in direct contradiction of a company policy and practice that she herself was partially responsible for enforcing. Accordingly, no reasonable trier of fact could conclude that Summit had reason to know that Kellar was working before her shift.” Id. at * 19. 

The “suffer or permit” standard remains a relatively broad one, which can render employee activities compensable even if members of management or others with authority are not expressly aware of the activities at the time they are performed. Kellar provides valuable instruction to employers (particularly those within the Seventh Circuit’s reach, encompassing Illinois, Indiana and Wisconsin) in crafting FLSA-compliant policies for application to non-exempt employees. With that said, all employers should carefully scrutinize timekeeping and wage payment policies to avoid disputes of this ilk. 

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Courts continue to analyze the compensability of preliminary and postliminary time: time spent before or after a non-exempt employee’s shift on certain tasks related to the performance of the employee’s job. Many suits allege the time spent “donning and doffing” of personal protective equipment (“PPE”) related to dangerous work environments (slaughter houses, power plants, etc.) must be compensated as being “integral and indispensible” to the performance of the jobs in question. In a recent opinion, while Magistrate Judge George H. Lowe of the Northern District of New York observed that this legal issue has “troubled courts for more than sixty years,” the Court ultimately determined that former employees of the Massena West aluminum smelting facility operated by Alcoa were not entitled to compensation for time spent putting on and removing “flame retardant shirts and pants, metatarsal (or steel-toed) boots, spats, hard hats with snoods that cover the back of the neck, and safety glasses.” Adams v. Alcoa, Inc., 2011 U.S. Dist. LEXIS 110718 (N.D.N.Y Sept. 27, 2011)

The Adams plaintiffs worked in the potroom and ingot departments of the plant, jobs which required them to be near molten metal and wear the flame retardant shirts and pants, steel-toed boots, spats and hard hats. Alcoa provided the Plaintiffs with extra uniforms, laundered those uniforms, and permitted employees to don/doff the uniforms at home, or in a facility at Massena West. Magistrate Judge Lowe, relying on the Second Circuit’s “extremely narrow” interpretation of the “integral and indispensable” requirement in a factually similar case, along with a Department of Labor advisory memorandum addressing when donning and doffing time is compensable, ruled that the time spent by Plaintiffs putting on PPE was neither “integral” (which required that PPE be necessary to enter a “lethal atmosphere”) nor “indispensable” (which, under the DOL guidance, required that the donning and doffing by necessity occur on premises, not at home). Id. at * 16-27 citing Gorman v. Consolidated Edison Corp., 488 F.3d 586 (2d Cir. 2007). 

The scope of the compensable workday for non-exempt employees is a legal concept that is devoid of clairty, and DOL and court guidance on the issue has not always been consistent. Employers must assess what state and federal law require in their jurisdictions with respect to the compensability of all tasks performed by the employee at the employer’s behest.

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As we have discussed, federal courts generally interpret the FLSA in conformity with longstanding FLSA principles stated in, among other seminal cases, United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487 (2d Cir. 1960). Under the Klinghoffer rule, the FLSA generally just mandates: 1) the payment of overtime at the regular rate for hours in excess of 40; and, 2) that employees receive en toto at least minimum wage for all hours of work in a workweek. Thus, an employee who is paid for 35 hours at a rate above the minimum wage, and then later alleges that he or she worked 36 hours, has a claim under the FLSA only if inclusion of that additional hour pushes his or her regular rate for the 36 compensable hours below the minimum wage (currently $7.25/hour). A new decision calls this longstanding rule into question. Norceide v. Cambridge Health Alliance, 2011 U.S. Dist. LEXIS 103686 (D. Mass. Aug. 28, 2011).

In reviewing Defendant’s motion to dismiss a non-overtime off-the-clock claim under Klinghoffer, Judge Nancy Gertner observed that the courts following the Klinghoffer rule have “mostly done so by citing to Klinghoffer without any further analysis of whether, in fact, the weekly average rule effectuates the legislative intent of the FLSA's minimum wage law.” Id. at * 12. Observing that the First Circuit (encompassing Massachusetts) has not had cause to rule on the issue, the judge concluded that “the plain language of the minimum wage provision, the remaining parts of the FLSA, and the Congress' primary goal of protecting workers buttresses the conclusion that Congress intended for the hour-by-hour method to be used for determining a minimum wage violation.” Id. at * 19.

While many state laws already provide employee protection for gap time by requiring an agreed upon rate to be paid for all hours worked, Norceide is an adverse decision for all employers, particularly those with operations in jurisdictions regulated predominately or exclusively by the FLSA, and those within the First Circuit (Massachusetts, Rhode Island, New Hampshire, Maine and Puerto Rico). Such employers are not only liable for gap time claims but also the additional 100% liquidated damages available under the FLSA. Proper tracking of hours worked remains of paramount importance for all employers.

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In this post, we discussed two different courts’ analyses of hospital plaintiffs’ attempts to seek conditional certification of their claims that they were not paid for allegedly working meal periods due to the employers’ use of an auto-deduct for meal periods. In an opinion addressing such a claim on the merits (as opposed to the lower standard applicable to determining appropriateness of conditional certification of an FLSA collective action), a  Detroit federal court rejected, on summary judgment, such an assertion. Deppen v. Detroit Med. Ctr., 2011 U.S. Dist. LEXIS 78247 ( E.D. Mich. July 19, 2011).

In Deppen, the plaintiff nurse anesthetist claimed that the use of an auto-deduct for meal breaks, coupled with the fact that supervisors recorded employees’ time, demonstrated that she was not paid in a compliant fashion for 30 minute meal periods deducted per shift. After observing that defendant had demonstrated there were numerous work weeks where plaintiff either: 1) did not work over 40 hours (thus had no claim for gap time under the FLSA as discussed in this post); or 2) was overpaid for time she did not work, the court went on to determine the plaintiff had failed to “meet her burden showing that she performed substantial duties and spent her meal time predominantly for [the hospital’s] benefit.” Id. at *18 citing Myracle v. General Electric Co., 1994 U.S. App LEXIS 23307 (6th Cir. Aug. 23, 1994). The court further observed there was “adequate staffing to cover the patient caseload and allow the OB CRNA’s to take their meal breaks.” 

Wage/hour plaintiffs continue to regularly allege that automatic, systemic practices, such as an auto-deduct for meal periods or payment based on a set schedule such as 9:00 a.m. to 5:00 p.m, run afoul of the FLSA and applicable state laws. While potentially defensible, such policies and practices will always expose employers to greater risk of an allegation that wages paid did not correlate to actual hours of work. Employers should scrutinize such practices closely, and take additional measures to ensure compliance as necessary.

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An ongoing issue in wage and hour litigation is the compensability of changing time – the time spent putting on and removing garments and protective material related to the performance of an employee’s duties. Earlier this month, the Court of Appeals for the Tenth Circuit affirmed the District Court’s grant of summary judgment to defendant in Salazar v. Butterball, LLC, holding that the donning and doffing of personal protective equipment at a turkey processing plant was non-compensable “changing clothes” time under the Fair Labor Standards Act, Section 3(o). See Salazar v. Butterball, LLC, No. 10-1154, 2011 U.S. App. LEXIS 13653 (10th Cir. July 5, 2011). A Jackson Lewis team led by Atlanta partner Steve Munger represented Butterball in this matter.

Plaintiffs in Salazar claimed that defendants should have paid them for time spent donning and doffing required frocks, aprons, gloves, boots, hard hats, safety glasses, knife holders, and arm guards, before commencing and after completing their shifts. The District and Circuit courts found that such time was non-compensable since the employer maintained a “custom and practice” of not compensating such time within the meaning of Section 3(o). In reaching its conclusion and affirming the court below, the Circuit reiterated that time spent changing clothes at the beginning or end of each workday can be excluded from the number of hours worked under Section 3(o) where a collective bargaining agreement’s “express terms or custom or practice” is not to compensate for such time. Although neither the CBA nor written company policy expressly stated that such time would not be paid, the employer did have a “custom or practice,” the Court held, since the employees’ union never sought to negotiate the pre-existing practice during its collective bargaining negotiations.

The plaintiffs argued that the protective equipment did not constitute “clothes” under applicable U.S. Department of Labor interpretive guidance. In its most recent pronouncement on this issue, the DOL stated that garments “designed to protect against workplace hazards, serve[] specialized functions, and required by the employer or by law” are not “clothes.” The appeals court disagreed, finding that the DOL’s interpretive guidance was not entitled to deference since the DOL’s position had changed repeatedly over the years. The Court found that the equipment fell within the broad dictionary definition of “clothes,” which includes all garments and accessories that are worn by an individual. The Court also held that, unlike the white-collar exemptions to overtime, a court is not constrained to narrowly interpret the section 3(o) exemption.

Unionized employers who require their employees to don and doff protective garments, equipment, and other accessories must continue to closely analyze the applicability of the Section 3(o) exemption in their jurisdiction, under federal and state law. The holding in Salazar is certainly a positive development for employers, especially employers within the Tenth Circuit (the federal circuit covering Oklahoma, Kansas, New Mexico, Colorado, Utah and Wyoming).

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As previously discussed, the FLSA requires payment for all hours where an employer “suffers or permits” an employee to work. Compensable time can include time ostensibly designated for meal and other breaks if the employee in question is not completely relieved of duty and/or if the period is insufficient length. Aggrieved employees often allege that employers systemically deduct a fixed amount of time for a meal break, even if a a valid meal period is not provided (an “auto deduct”). This claim often arises in the health care industry where the demands of patient care often impacts an employee’s ability to take an uninterrupted 30 minute meal break. However, as one federal court recently observed, such an allegation is not necessarily appropriate for collective action certification under the FLSA. Cason v. Vibra Healthcare, 2011 U.S. Dist. LEXIS 47160 (E.D. Mich. May 3, 2011). 

In Cason, the Court concluded that while plaintiff nurse alleged that she performed work during meal periods for Defendant hospital but was not paid for such time due to an “auto deduct”, such allegation coupled with an unsupported assertion that other employees worked through meals but were not paid due to the “auto deduct” was insufficient to support conditional certification of the collective action. The Court observed that Plaintiff Cason had “not identified any other person who claims that her FLSA rights were violated by the automatic meal break deduction policy.”

While plaintiffs often argue in FLSA cases that a ruling such as Cason is antithetical to the “low standard” appropriate at the conditional certification stage in FLSA actions, a decision such as Cason is appropriate to spare a defendant the burden and costs of proceeding through the conditional certification and notice process, as well as collective action discovery.  In another recent case highlighting this dilemma, and the wisdom of the Cason decision, a previously conditionally certified collective action also alleging auto-deduct claims against a hospital employer was decertified on just such a theory. White v. Baptist Mem. Health Care Corp., 2011 U.S. Dist. LEXIS 52928 (W.D. Tenn. May 17, 2011).

While this is a positive decision for employers, business should continue to ensure they take appropriate measures to ensure employees are paid for all hours worked and that any wage and hour policies cannot be used by the plaintiffs bar to support class/collective claims.

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The ubiquity of class and collective action lawsuits under the FLSA and state wage and hour laws requires employers to remain ever vigilant with respect to their wage practices. The ferocity of the plaintiffs’ bar is such that even seemingly settled FLSA doctrine is subject to attack. Recently, a federal district court in Illinois rejected one such attack. Brown v. Lululemon Athletica, Inc., 2011 U.S. Dist. LEXIS 18217 (N.D. Ill. Feb. 24, 2011). 

Lululemon concerned typical “off-the-clock” allegations, namely that the plaintiff sales clerk for the Defendant exercise apparel retailer was required to put in extra hours of work performing tasks for which she was not compensated but which Plaintiff alleged were all for the employer’s benefit and thus, compensable time. However, plaintiff did not allege that such activities pushed her over the statutory threshold for overtime of 40 hours in a workweek, or that by adding such unpaid hours to her total hours worked her rate of pay (as measured by her compensation divided by hours worked) fell below the minimum wage. Rather, plaintiff sought compensation for this as “gap time”, the time between her paid hours of work (which were under 40) and her actual hours of work based on these additional tasks (which were greater, but also under 40). 

Collecting more than a dozen cases from around the country (including a number of appellate decisions), the court rejected this claim, noting that Plaintiff sought to rely on a minority position permitting gap time claims within the Tenth Circuit Court of Appeals (which does not encompass Illinois). The court did note that where an overtime event has occurred, an employee can receive compensation for both gap time and overtime hours. Id. at 14-15, citing 29 C.F.R. § 778.315. 

Lululemon demonstrates a stark reality: employees and their counsel continue to bring wage claims in the face of contrary authority. Absent emphatic direction from either the relevant Circuit court or the United States Supreme Court (which has issued very few decisions addressing the FLSA), employers must remain proactive in this area, and be prepared to defend claims as they arise. Furthermore, state law may provide a cause of action for unpaid gap time. The best advice is to always act with caution. 

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As discussed at length on the Jackson Lewis web site here, the U.S. Department of Labor has announced the launch of its first free application for smartphones, releasing an “App” compatible with iPhone and iPod Touch (and available in English and Spanish), with which users can track regular work hours, break time and any overtime hours they work for one or more employers. This application raises numerous issues for employers relating to the implementation of official employer time tracking policies and recording of hours worked, topics analyzed in the very recent Second Circuit decision on these subjects. 

Employers must keep this new time tracking tool in mind when reviewing wage-and-hour policies, and when issuing company smartphones.

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As previously discussed, a federal court in the Western District of New York issued several important rulings in an FLSA case brought by a retail specialist responsible for the stocking, pricing and display of Black & Decker products at six Home Depot stores. In an omnibus decision reviewing all of these district rulings, the Second Circuit has held:

·         The district court properly ruled that the time plaintiff spent commuting to any of the six stores was non-compensable commuting time, even if it was preceded by compensable administrative work in the form of reviewing schedules or work-related communications; and

·         The district court erred in granting summary judgment as to Plaintiff’s off-the-clock claim, finding fact issues existed regarding whether Kuebel, who admitted to falsely shaving time from his time sheets to reflect only forty hours of work, was following instructions given by supervisors.

Kuebel v. Black & Decker Inc., No. 10-2273, 2011 U.S. App. LEXIS 9448 (2d Cir. May 5, 2011). Detailed analysis of this decision is available on the Jackson Lewis web site here.

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The FLSA requires that employers pay employees for all work time, as well as for any time that the employee is “engaged to wait.”  An employee is “engaged to wait” when the employee is idle, but is constrained with respect to engaging in personal activities. Thus, the employee’s time is deemed to be “for the benefit” of the employer.  Examples may include time spent waiting to respond to on-site incidents, monitoring a work location, or maintaining a presence in a particular area for public safety reasons,. When the employee is deemed free to pursue personal interests, the employee is “waiting to engage”, and need not be compensated. The United States District Court for the Southern District of Iowa recently issued a decision analyzing and applying the  “engaged to wait” concept to lunch breaks in regard to security employees required to remain on-premises and on-call during their meal period.

Aiken v. Catholic Health Initiatives, No. 4:07-cv-018, 2010 U.S. Dist. LEXIS 79782 (S.D. Iowa 2010), concerned private security guards who worked on the premises of defendant’s hospitals.   The security guards were  allotted 30 minute unpaid meal breaks pursuant to defendant’s written policy and practice. However for the duration of this break they were required to: (1) remain on-premises; (2) carry their hospital radios;, and (3) respond to any incidents or assignments in the hospital, should they arise. If a security guard was unable to take a full thirty-minute meal break during his/her shift due to an incident, the employee was instructed to notify their supervisor so that they could be paid for the entire thirty-minute period. The security guards sought compensation for these unpaid meal periods under the FLSA

The court held that the security guards were not “engaged to wait” during this time, but rather were free to pursue personal interests, such as making personal calls, playing card games, and surfing the Internet, and therefore their meal breaks were not compensable. Although the court acknowledged that the employer derived some benefit from the security guards’ “deterrence value” when they remained on premises—especially considering that each hospital had only one security guard per shift—it nonetheless found that the “predominant benefit” of the meal break fell to the employees themselves. 

Interestingly, the security guards argued that they were free to pursue personal activities during extensive “down time” during their compensable work hours, and therefore the activities pursued during “working time” and during the meal breaks were indistinguishable and, thus, equally compensable. The court flatly rejected this argument, finding such time was plainly not work, even if the employer chose to compensate for such personal time during the actual workday. 

In rejecting Plaintiffs’ claims and holding that neither 1) the potential to have to perform work nor 2) the actual performance of work on an occasional basis converted all meals breaks to compensable time, the court did note that if the security guards’ meal breaks were interrupted with a high level of frequency then the meal breaks could potentially be considered working time. However, the interruptions here were too infrequent to rise to that level, and regardless employees were paid whenever they notified their supervisors of a meal break interruption,. 

Employers who wish to require employees to remain on-call during meal periods must be cautious of state laws and ensure that any such on-call time does not regularly restrict employees from engaging in personal activities.

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As discussed here, the FLSA contains a provision relating to the compensability of time spent donning and doffing uniforms, when the compensability of such time is addressed in a collective bargaining agreement. 29 U.S.C. § 203(o). However, even where a unionized employer through a collective bargaining agreement is not required to pay for such time, if the time is otherwise compensable under state law, the FLSA is no defense, held Judge Easterbrook of the Seventh Circuit this week. Spoerle v. Kraft Foods Global, Inc., 2010 U.S. App. LEXIS 15960 (7th Cir. Wis. Aug. 2, 2010).

Spoerle concerns the compensability of time spent putting on and taking off “safety gear, such as steel-toed boots and hard hats, plus a smock that keeps other garments clean” as well as hair nets and beard nets” at an Oscar Mayer plant in Wisconsin. Id. at * 2. The Court noted that it “takes a few minutes at the start of every day to put these items on, and a few more at day's end to take them off.” Id. Kraft Foods and the union agreed that this time is not compensable. Id. at * 2-3. However, Kraft Foods also conceded within the context of Spoerle that, but for the existence of a CBA, the time in question would be compensable under Wisconsin’s state wage law. 

As observed by the district court and reiterated by the Seventh Circuit, 29 U.S.C. § 218(a) of the FLSA states:

No provision of this chapter . . . shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a maximum work week lower than the maximum workweek established under this chapter …. No provision of this chapter shall justify any employer in reducing a wage paid by him which is in excess of the applicable minimum wage under this chapter, or justify any employer in increasing hours of employment maintained by him which are shorter than the maximum hours applicable under this chapter.

This provision codifies an unequivocal proposition: the FLSA does not prevent states from enacting wage laws which provide greater rights to employees. The Court also specifically noted that 203(o) by its plain language is limited to calculating hours worked “for the purposes of sections 206 and 207 of this title.” Id. at * 5. Finally, as explained by the Court, the existence of the CBA did not itself preempt the state wage law because state rules that disregard, rather than interpret, collective bargaining agreements are not preempted by federal labor policy. Id. citing Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399 (1988).

Spoerle highlights the need for every organization to develop a full and complete understanding of both the FLSA and all relevant state wage and hour laws. Employers with multi-state operations must be particularly careful to mind the niceties of individual state laws.

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As discussed here, an employer’s maintenance of accurate records of hours worked by employees is not only a substantive requirement of the FLSA, but an essential component to defending against “off the clock” claims. But what happens if an employee brings such a claim and the employer has not maintained records? Is the employer defenseless?

The answer is “Not necessarily,” as highlighted in the recent decision issued by a federal judge following an trial in the District of Maryland. Almendarez v. J.T.T., 2010 U.S. Dist. LEXIS 57371 (D. Md. June 8, 2010). In Almendarez, a jury found that all seven plaintiffs worked overtime, and that Defendants did not maintain appropriate records. However, the jury found that only three of the plaintiffs worked overtime for which they were not properly compensated. The  jury found that the employer properly compensated the four remaining plaintiffs for overtime hours worked. These four plaintiffs moved for an order that they were entitled to an overtime award as a matter of law based on the jury’s factual findings, or in the alternative for a new trial.

In denying the plaintiffs’ request, the Judge first explained that in the absence of the records required by the FLSA, evidence regarding hours actually worked and overtime paid were governed by the framework set forth in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692 (1946). To recover on an unpaid overtime claim under Mt. Clemens, a Plaintiff is “required to show, by a preponderance of the evidence, that he actually worked overtime hours for which he was not compensated at the required rate.” Almendarez, 2010 U.S. Dist LEXIS 57371 at * 11. Because making this determination in the absence of proper records is “heavily dependent on the jury's assessment of the credibility and veracity of the witnesses”, and since the jury considered the admissible evidence as to overtime hours worked and overtime compensation paid, the court held that the jury’s verdicts were not subject to reversal as a matter of law. The jury was entitled to credit the Defendant’s evidence in the form of “testimony regarding the number of hours required to complete Plaintiffs' work day and how much they were paid”, along with some “documentary evidence regarding the amounts Plaintiffs were paid in specific periods.” Id. at * 11-12. 

While the failure to maintain proper records both constitutes a likely FLSA violation and can hinder the defense of FLSA overtime actions, Defendants faced with FLSA claims for alleged unpaid working time should consider all the evidentiary means available to rebut allegations of alleged unpaid work.

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The Second Circuit recently affirmed a district court’s decision dismissing security guards’ claims for minimal amounts of allegedly uncompensated work time. In doing so, the Court reiteratedthe general principle applied by federal courts that “"[w]hen the matter in issue concerns only a few seconds or minutes of work beyond the scheduled working hours, such trifles may be disregarded. . . . It is only when an employee is required to give up a substantial measure of his time and effort that compensable working time is involved." Albrecht v. Wackenhut Corp., 2010 U.S. App. LEXIS 10973 at * 3 (2d Cir. N.Y. May 28, 2010) quoting Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692 (1946).

In Albrecht, the security guards alleged that time spent obtaining and returning their firearms and radios pre and post-shift constituted a “principal activity” under the FLSA, and thus was compensable. The court held that the Plaintiffs failed to controvert evidence in the record that such “arming up” and “arming down” involved only 30-90 seconds, and thus was de minimis. Id. at * 5. 

The Court acknowledged Plaintiffs’ argument that a requirement that non-exempt employees be present and available “15 minutes before the start of a scheduled shift” could give rise to a viable claim under the FLSA, but held that this claim was not properly alleged in the original complaint, which was limited to the time related to arming up and down. Id. at * 5-6.

Despite this favorable result, employers should be conservative in deeming mandatory time spent on premises to be non-compensable as a preliminary and/or de minimis activity.  In fact, the USDOL generally does not recognize the de minimus defense.

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Reinforcing the importance of properly crafted and enforced work-time tracking policies, Judge  Michael Telesca of the Western District of New York recently dismissed the balance of a plaintiff’s claims in a lawsuit alleging failure to compensate non-exempt employees for all overtime hours. The Court based its decision on the employer’s strong time tracking policies and protocols. Kuebel v. Black & Decker (U.S.) Inc., 2010 U.S. Dist. LEXIS 46533 (W.D.N.Y. May 12, 2010).

The plaintiff in Kuebel was a retail specialist responsible for the stocking, pricing and display of Black & Decker products at six Home Depot stores. Id. at * 8-9. He alleged that his supervisors instructed him to “shave” his timesheets to reflect forty hours worked each week, regardless of how many he actually worked, in contravention of Black & Decker’s written policies regarding timekeeping. Id. at * 22-23. Based on the Court’s review of the claims and plaintiff’s records of hours worked, as  reflected by his timesheets, his calendar and his company-issued PDA, the Court granted summary judgment to Black & Decker. Id. at * 32-45. 

In analyzing the Defendant’s summary judgment motion, the Court considered whether Plaintiff had demonstrated the two “essential” components of his “off the clock” claim, namely “1) the amount of uncompensated work he actually performed and (2) that defendant had actual or constructive knowledge of the amount of time that plaintiff was working off-the-clock.” Id. at * 30. 

As to the first prong, evidence of the amount of uncompensated work, the Court held that plaintiff failed to demonstrate the inadequacy of Defendant’s time records (which would have entitled Plaintiff to a lesser burden of proof). Id. at * 30-32. The time records were thus an accurate record of Plaintiff’s overtime worked. And, the Court further reasoned that based on plaintiff’s own contradictory statements regarding the percentage of his timesheets which were allegedly inaccurate, plaintiff could not prevail even if entitled to the lower standard, which typically is available to Plaintiffs in FLSA cases only where the employer has failed to maintain accurate records of hours worked. Id. Thus, Plaintiff could not provide evidence of the amount of allegedly uncompensated work he had performed. Id.

Even if plaintiff was able to present evidence of uncompensated time, the Court stated no monies would be due since plaintiff could not meet the second prong of the test, in that he failed to demonstrate that the Defendant possessed “constructive knowledge” of his uncompensated work hours, despite his allegations that Defendant’s managers instructed him to underreport his time. Id. 

In an earlier opinion in the same case, the Judge had dismissed Plaintiff’s claims for alleged unpaid commuting time. Kuebel v. Black & Decker (U.S.) Inc., 2009 U.S. Dist. LEXIS 43846 (W.D.N.Y. May 18, 2009)(commute time up to 60 minutes to and from varying job sites not compensable under FLSA).   There, the Court held that despite the fact that Plaintiff’s initial “commute” could be to any one of his six assigned stores, Black & Decker’s policy of designating the first hour of that commute as non-compensable commuting time did not violate the FLSA. The Court did not reach the question of whether the entire commute was non-compensable, as Black & Decker treated commuting time in excess of the first hour as compensable.

Kuebel demonstrates that it is possible for an employer to obtain summary judgment on a claim for alleged unrecorded unpaid work time even where that employee is a “field” employee not under the employer’s roof and immediate supervision. It is essential for all employers to ensure that their timekeeping policies comport with applicable federal and state law, expressly prohibit “off the clock” work and clearly and unequivocally advise employees to report all hours worked. 

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The Ninth Circuit recently revised and reissued its earlier opinion in Rutti v. Lojack Corp., No. 07-56599 (9th Cir. Mar. 2, 2010), holding upon further review that the Plaintiff’s commuting time is compensable under California law, while continuing to find that such time  is not compensable under the FLSA. The Court did not change its ruling that time spent on the required post-shift activity at issue in the case – the daily transmission of data – was compensable.

The Plaintiff, an automotive technician, installed and repaired vehicle recovery systems for the employer. Because technicians perform most of their duties at the clients’ locations, the employer required Plaintiff to use a company-owned vehicle to travel to clients’ sites. The employer prohibited technicians from carrying passengers in the company vehicles and from using the vehicles for personal business. The technicians also were required to keep their cell phones on while driving.

The employer paid Plaintiff on an hourly basis for the period beginning when he arrived at his first job and ending when he completed his final job, but not any commuting time. Plaintiff, on behalf of himself and all technicians, sued the employer to recover compensation for commuting time and for alleged preliminary and post-shift activities.

Addressing Plaintiff’s claim that the commuting time should be compensable under California law, the Court concluded that the district court erred in granting summary judgment to the employer. California law requires that employees be compensated for all time “during which an employee is subject to the control of an employer.” Morillion v. Royal Packing Co., 22 Cal. 4th 575, 578 (2000). In Morillion, the California Supreme Court held that the plaintiffs were “subject to the control” of their employer during a mandatory bus commute because “plaintiffs could not drop off their children at school, stop for breakfast before work, or run other errands requiring the use of a car.” The California Supreme Court reasoned the “[p]laintiffs were foreclosed from numerous activities in which they might otherwise engage if they were permitted to travel to the fields by their own transportation.”

Similarly, in Lojack, Plaintiff was required to drive the company vehicle, could not stop off for personal errands, could not take passengers, was required to drive the vehicle directly from home to his job and back, and could not use his cell phone while driving, except to answer calls from the company dispatcher. Accordingly, the Court found that “Plaintiff was under Lojack’s control while driving the Lojack vehicle en route to the first Lojack job of the day and on his way home at the end of the day.” Thus, the Court held that his commute was compensable under California law.

Employers that provide company vehicles and have restrictions regarding their use should expect increased challenges to their policies and claims that employees’ commutes are “compulsory,” rather than ordinary.  A more detailed analysis of the  Lojack decision is available here.

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